ESSAY
Myth of the new cold war BY STEPHEN KOTKIN
Russia was not a liberal democracy under Teltsin, and neither has it reverted to totalitarianism under Putin. But America's long-established religiously inspired concern about "losing" Russia is once more at the centre of debate
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hat is it about Russia that drives the AngloAmerican world mad? Soviet communism collapses, the empire is relinquished. Then come the wild hopes and failures of the 1990s—including tlie 1993 half-coup and the tank assault on Russia's legislature, the results-adjusted referendum on a new constitution (still in force), the dubious privatisations, the war in Chechnya and the financial default in 1998. But after all that, in December 1999 Boris Yeltsin apologise.s, steps down early—and names his prime minister and former secret police chief Vladimir Putin as acting president. To widespread consternation, Yeltsin predicts that the obscure spy is the man to "unite around himself those who will revive Great Russia.'" Incredibly, this is exactly what transpires. 38
Prospect APRIL 2008
And this is a grand disappointment, even a frightening prospect? The elevation of Putin—a secret deal promoted by Yeltsin's personal and political family motivated less by patriotism than self-preservation— will go down as one of the most enduring aspects of Yeltsin's shaky legacy. Now, Putin, just like his benefactor, has selected his successor, Russia's new president Dmitri Medvedev Sure, Putin has no plans to retire to a hospital-dacha, where Yeltsin had spent much of his presidency. Still, in his crafty way Putin has abided by the constitutional limit of two presidential terms. In May, Medvedev will acquire the immense powers of the Russian presidency {a gift of Yeltsin) in circumstances whereby the Russian state is no longer incoherent (a gift of Putin). And this is grounds fbr near universal dismissal in the west? Two clashing myths have opened a gulf of misunderstanding towards Russia. First is the myth in the west that the chaos and impoverishment under Yeltsin amounted to a rough democracy, which Putin went on to destroy. When something comes undone that easily, it was probably never what it was cracked up to be. Still, the myth of Russia's overturned democracy unites cold war nostalgists, who miss the enemy, with a new generation of Russiawatchers, many of whom participated earnestly in the illusory 1990s democracy-building project in Russia and are now disillusioned (and tenured). Second is the myth, on the Russian side, that the KGB was the one Soviet-era institution that was uncorrupted, patriotic and able to restore order. This credits Putin's stooge entourage for the economic liberalisation that was actually pushed through by the non-KGB personnel around him. Each of these myths deeply rankles the other side. When a big majority of Russians accept or even applaud Putin's concentration of power, AngloAmerican observers suspect not just ignorance but a love of authoritarianism. (Unfortunately, Russians have never been offered genuine democracy and the rule of law alongside soaring living standards.) When foreign-based commentators and academics celebrate Yeltsin's Russia, which was worth a paltry $200bn and suffered international humiliation, while denouncing Putin's Russia, which has a GDP of $ 1.3 trillion and has regained global stature, most Russians detect not just incomprehension but ill-will. Let's take a deep breath. To recognise that Putin inherited a dysfunctional situation derived from rampant in.sider theft and regional misrule is not to condone his KGB-style rule, which has of^en been nasty and sometimes self-defeating. Even though many Russian officials are conscientious and compeStephen Kotkin is director ol the programme on Russian and Eurasian studies at Princeton University
STEPHEN KOTKIN ESSAY
tent, tbe state remains too corrupt, as in most places around tbe world. At the top, privileged functionaries bave grabbed (and are still grabbing) prime business holdings. At all levels, officialdom now seeks its rewards by mimicking the Kremlin's repression and manipulation. But Russia is also increasingly prosperous, with a new consumer-driven market economy and a burgeoning middle-class society full of pride. This combination of a relatively closed, unstable political system and a relatively open, stable society may seem Incompatible—but there it is. What happens wben a large, important country turns out to have a dynamic, open market economy integrated into the global system, yet a political system that is undemocratic and not democratising? A lot of head-scratcbing by experts. It may be comforting in the corridors of punditry and social science to write about how economic growth without the rule of law is doomed to fail (China?) or bow economic grow th eventually brings political liberalisation. But many countries, not just Russia, have more or less manipulated elections while lacking the rule of law, and yet still have dynamic market economies. In Russia private property is not guaranteed—and property ownership is widespread. A conceptual adjustment to Russia's seemingly impossible reality is now under way, but the process is painful and slow. "When I worked in Moscow in 1994 and 1995 for the National Democratic Institute, an American NGO, I could not have imagined the present situation," confessed Sarah Mendelson, a senior fellow in Russian affairs at the Centre for Strategic and International Studies, in ÚK American Scholar recently. "We thought we were on the frontier of a democratic revolution. We weren't. We were witnessing a market revolution." This basic understanding, so long in coming, is not yet widespread. For the most part, pathetic cries about how "the west," whate\'er that is, has (again) "lost" Russia, and bow the west must somehow "resist" Putin, persist. dward Lucas, by his telling, was once deported by the KGB. This happened in 1990, when Lucas, a British passport-holder, entered Lithuania on a Lithuanian visa after it declared its independence but before the Soviet Union bad been formally dissolved. As far as tbis reviewer is aware, Lucas has never been imprisoned for bis convictions. Still, though not technically a dissident, be argues like one. That is bow a very perspicacious journalist like Lucas, the central and eastern Europe correspondent of the Economist, could end up writing a not very persuasive polemic called The New Cold IVar:
E
How the Kremlin Menaces Both Russia and the H'est.
Russia, he argues, is aggressively waging a global war for influence witb it.s vast natural resources and
piles of cash, and although the US and Britain are trying to stand up to the mighty bear, Germany is colluding, and China is, possibly, "co-operating." Refutation of the idea that the cold war has returned is in fact provided by Lucas himself He notes that eastern Europe is now free. Russians can go abroad. Russia's consumerist economy booms. Russia is not a military menace (its defence budget is at least la times smaller than that of the US). In Lucas's words, "tbe old cold war is indeed over." As for what Lucas calls "tbe new ideology" in Russia, which has led him to claim a newcoXá war, he writes that its "main ingredients are unexceptional: an edgy sense of national destiny, a preference for stability over freedom and a strong dislike of western hypocrisy and shallowness." He adds that "similar views are held in many countries outside Russia." And yet, he insists, "it is tbe combination and intensity [of these views in Russia]] that are unusual." Not in the least. It Is the circumstance that Russia can do something about such globally shared views tbat appears to be the rub. Unlike Germany and Japan, which were defeated in tbe second world w^ar, Lucas writes, Russia is "unrepentant" and "petulant." Imagine that. And Imagine this: "Tbe Kremlin's representatives throw habitual tantrums in international organisations. They block programmes in countries they don't like." And tbis: Russia is bullying small states. And this: Russia is cosying up to despotisms. Russia is using its leverage to acquire prime assets abroad. Russia is hiring lobbyists and agents of influence in western countries. Power politics is not pretty, but is Russia's muscle-flexing that unusual, or at all effective? "Slice by slice," Lucas warns, "the Kremlin is adding to its sphere of influence." Is tbat true? Here's his new domino theory: if Russia is allowed to get its bullying way in the Caucasus and the Balkans, then comes the turn of central Europe, even w^estern Europe, and the Arctic. Once again, however, tbe reader can turn to Lucas for relief The Kremlin, he writes, "has systematically BOOKS & ARTICLES DISCUSSED The New Cotd PFar: How the Kremlin Menaces liolh Russia and the {{'est by Edward Lucas (Bloom.sbiii'y) The American Mission and ike 'Evil Empire": the Crusade for a
Free Russia since ¡881 by David S Foglesong (Cambridge) Rusnan Foreign Policy in the Twe?ity-ßrst Century and the Shadow of the Past edited by Robert Lt'gvold (Columbia) "The Myth of the Authoritarian Model: How Putin's Crackdown Holds Russia Back" hy Michael McFaiil and Kathryn Stoner-Weiss [Foreign Affairs, Jan/Feb ¿008) "Russia's Wrong Direction: What the United States Can and Should Do," Project Director Stephen Sestanovich (Council for Foreign Relations)
Prospect APRIL 2008
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ESSAY STEPHEN KOTKIN
Lucas cries wolf about some new cold war while the very countries he insists lie in grave danger are inside the EU and Nato. Has he read the Nato charter?
overplayed its hand." Huffing and puffing over the Kremlin's various pipeline projects, Lucas has to conclude that "the biggest question for Europe in the coming decade is likely to be how to deal with a Russia that is short of gas," So much for the energy weapon. Russia is "stuck," Lucas writes. "It settles for being noticed." Further: "it compensates for real weakness by showing pretend .strengths." Lucas bores right through Russia's posturing, and still insists on a call to arms. "Eastern Europe," he warns several times, "sits on the front line of the new cold war." Incredibly, he invokes Chamberlain and Munich in 1938. The same countries, tbe same lessons, he claims. Lucas is, in fact, uncommonly lucid on today's eastern European states. "The paradox," he writes, "is that these ill-governed, tetchy and intolerant countries are tbe front line that the west is trying to defend." In other words, Lucas is crying wolf about some new cold war while the very countries he insists lie in grave danger are inside the EU and Nato. Has he read the Nato charter? He goes so far as to demand "a confrontation now" because "if we don't win the new cold war on terms of our choosing, we will fight at a time and place chosen by our adversary." Lucas works himself into a lather over how the Kremlin conceals its "lawless, brutal and greedy reality" behind the trappings of elections. Is this really "clever manoeuvring"? Ed—we are not fooled! Russia is an authoritarian regime. Its elites' actions are frequently reprehensible, and sometimes criminal even by Russian standards.
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his could be the smartest incoherent book this reviewer has ever read. Lucas writes divinely and offers a sharp-eyed foray through the thicket of post-Soviet misinterpretations—up to a point. Take his sober attitude toward the Yeltsin years. "Some sort of clean-up was certainly overdue," he writes. He calls the 1990s muddle "perfect... for a quiet putsch by the heirs of the KGB." He further notes that "the oligarchs were certainly a deserving target," even if the selectivity of those attacks bothers him. Even more pointedly, Lucas writes that postYeltsin Russia "is a country in which it is possible for a private citizen to dream about personal fulfilment through brains and hard work." And this: "Never in Russian history ha\e so many Russians lived so well 40
Prosped APRIL 2OO8
and so freely." All the same, Lucas asserts that compared with Putinism, "the Yeltsin years now look less bad" and that Putin "betrayed" Yeltsin's commitment to "friendship" with the west. Back and forth Lucas goes, alternately incisive and imconvincing. Unlike his employer, the Economist, Lucas does not undersell Russia's economic achievements in order to diminish Putin. Rather, be likens the new Russia to today's Brazil, or to India. He also notes Russia's huge positive significance for Europe. "Russia is one of the most lucrative markets in the world, bigger than all the other central and east European countries combined," Lucas says. At the same time, confoundingly, he suggests both that "western businessmen show no shame in following their wallets" and that "it is hard to fault German companies for acting in the interests of their shareholders." Which is itP His purple passages read like the inverse of the Kremlin's electionyear propaganda: "We are facing people who want to harm us, frustrate us and weaken us," he asserts. But if, as he writes, Russia's authoritarian version of capitalism "is not a new civilisation but a dead end," what exactly is the problem? The problem seems to be twofold. First, when Lucas urges European countries to overcome their differences with each other and with the US, he inadvertently shows that "the west" may no longer exist in the unified sense usually invoked. Second, Russia's authoritarian capitalism might not be a dead end at all. The rest of the world might have to live with an authoritarian, increasingly rich Russia (and again— not just Russia), Lucas has reconfirmed that the long, torturt)us era of civilising missions has passed. White men's burdens, new world orders, grandiose development schemes, huge foreign aid boondoggles, ci\il society building—goodbye to all that. Like it or not, effective geopolitics in the 21 st century can no longer be about forcing others to be like you, but must invohe accommodating new rising countries. Lucas knows this, but he doesn't seem to know what to do about it. His advice for handling the supposed new cold war involves a mere two steps. The first is to throw off "our" illusions and acknowledge Russian reality The next is to give up the naive idea that the west can influence Russia's domestic politics. "We are," Lucas himself concludes, "back in the era of great-power politics." Welcome to the lSth century. Still, there's one very important exception here. The political friars in London, Berlin and even Brussels will nianage a modus vivendi with Russia as well as China, while holding at home to their liberal and democratic values. But can Washington, tlie capital of a country that has only been around since the era of the civilising mission and ultimately owes its existence to Puritans, survive a world without selfassigned crusades? In the US, Russia's very make-
STEPHEN KOTKIN ESSAY
Lip, let alone its conduct, is treated as nothing less than an issue of American identity.
bling the US, have recoiled and condemned Russia's perfidious national cliaracter or its leaders—most recently Putin. The author's singular achievement is ust how many times can America "lose" Russia? A to show that well before the cold war, Russia served limitless number, it seems. But there may be hope: as America's dark double, an object of wishful thinksomeone has finally traced in compelling detail the ing, condescension and self-righteousness in a truest long-standing, religiously inspired American move- for American purpose—without much to show for ment to remake Russia. In The American Mission and such efforts inside Russia. Tlie author thereby places the "Evil Empire ": The CrusadeJbr a "Free Russia " since in context the cold war, when pamphleteers like I88I, David S Foglesong, a professor at Rutgers William F Buckley Jr and politicians like Ronald ReaUniversity, shows that the missionaries, economic gan pushed a crusade to revitalise the American advisers and activists promoting God, capitalism spirit. Russia then was a threat but also a means to and freedom in Russia stretch back in time to Amer- America's end (some fixed on a rollback of the alleged ica's former slave abolitionists. American fascination Soviet "spawn" inside the US—the welfare state— with Russia took oif with the terrorists' assassina- while others, after the Vietnam debacle, wanted to tion of Czar Alexander II in St Petersburg in 1881, restore "faith in the United States as a virtuous after which, James William Buel. a Missouri journal- nation with a unicjue liistorical mission"). Foglesong's ist and author of a popular account of the outlaws expose of Americans' "heady sense of their country's Jesse and Frank James, dashed across the tsarist unique blessings" helps make sense of the giddiness, empire to gather material for a book. "Civilisation is followed by rank disillusioîiment, vis-à-vis the postspreading rapidly eastward; it cannot stop or go Soviet Russia of the 1990s and ^OOOs. around Russia," Buel w rote, "and whether with bayoIn today's downer phase of the recurrent cycle net or psalm-book the march will be made tlirough that Foglesong identifies, however, the mission every part of the czar's dominions." endures. Consider that, in 2006, Stephen SesFoglesong demonstrates that powerful Americans tanovich of the US Council on Foreign Relations have again and again seen the possibility, even neces- spearheaded a high-profile report sensationally entisity, of spreading the word to Russia, and then, when tled "Russia's Wrong Direction: Wliat the United Russia fails to transform itself into something resem- States Can and Should Do" (put out under the names
J
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APRIL 2OO8 41
ESSAY STEPHEN KOTKiN
has taken part in and continues to advocate. Tiiat McFaul and Stoner-Weiss must fight their democracy-promotion battle on economic grounds does not help their cause. When they assert that increased state ownership in the last few years has slowed Russia's economic performance, they underestimate the degree to which until very recently, Russian growth was helped by squeezing tlie last drops of blood from Soviet-era investments, a tactic of the politicians John Edwards and Jack Kemp). Tlie that has stopped working. Moreover, excluding the document acknowledges that Wa.shington's efforts to two energy giants Rosneft and Gazprom, the make Mo.scow into a (junior) partner for America's increase in state ownership of companies in Russia is global agenda have failed. So the report recommends not dramatic. And many Russian state-owned firms, "selective co-operation" on issues for which Moscow including the energy giants, are either at or set to could supposedly still be coaxed into doing the US reduce the state share in themselves to 5 1 per cent. bidding. At the same time, the report admits that the (In 2007, Russian companies sold $33bn in stock US faces a difficult task in the ancient mission of try- flotations, mostly on international markets.) Russia's ing to rescue Russia from authoritarianism. And yet, state-owned companies, too, whatever their dubious despite how vital Russia seems to the US—in the methods, have not been resting on their bureaucratic report's illogic, precisely becau.se ofthat very need— laurels but rather acquiring assets for the money the démocratisation of Russia must remain a US for- (and ego). Of course, high debt accumulation to eign policy goal. "To go beyond mere expressions underwrite M&A may not be a smart growth stratabout the rollback of Russian democracy," the report egy (it sure looks stupid in the US). But as David advises, "the US should increase—^not cut—Freedom Woodruff'of the LSE has pointed out, Russia's stateSupport Act funds, focusing in particular on organi- owned companies can redeem international capital sations committed to free and fair parliamentary and market obligations only by increased market share presidential elections in 2007-08." and profits. They may turn out not to be up to the challenge. But hey, that's capitalism. Still more influential has been an essay published earlier this year in Foreign Affairs, "The Myth of the As their supposedly clinching argument, McFaul Authoritarian Model: How Putin's Crackdown Holds and Stoner-Weiss cite the circumstance that growtli Russia Back" by Michael McFaul and Kathryn rates in Russia's neighbours have often been slightly Stoner-Weiss. It is a rallying cry for America's better than Russia's—to wit, they write that from besieged democracy-promoter.s, wlio are eager to 1999 to 2006 Russia occupied nintli place among the regain the ground they lost after Iraq. The two 15 former Soviet republics in ranking of growth authors are at pains to show that Putin's Russia is rates. The differences in growth and hence rankings autocratic compared with Boris Yeltsin's "electoral" are not that large, but let's accept them. The larger democracy (a telling modifier), and that Putin's autoc- point, which the authors miss, is that these racy has had nothing to do with Russia's economic economies are all linked, so the authors need to take success. This argument is a red herring. The point is into account the impact of the large Russian econnot autocracy but the many vital economic liberalisa- omy's grow^th on these far smaller ones. In 2007, a tion measures that were passed during Putin's first half dozen or more of the former Soviet republics term (radical tax revision, red tape reduction, private were utterly dependent on Russia as a source of property in land) as well as the maintenance of tough remittances. More than 30 per cent of Tajikistan's fiscal discipline and macroeconomic stability. The GDP in 2007 consisted of remittances from Tajiks autliors downplay these breakthroughs (while also labouring in Russia. The estimate for remittances failing to note that second-term presidencies the from Russia to Moldova was close to 30 per cent of world over are rarely know^n for continued bold policy GDP, for Kyrgysstan more than 20 per cent, and for achievements). McFaul, the lead author, seems Georgia and Armenia probably between 10 and 20 unaware that his unsolicited concern for Russia con- per cent. And so on. Consider the possible effects if tinues more than a century of failed evangelism, as the millions of Ukrainians who have found work in outlined by Foglesong. Indeed, McFaul and his co- Russia suddenly had to go home, unemployed. Comauthor, both at Stanford, cannot be accused of exces- parable numbers for economic dependency are persive self-reflection: they condemn as "paranoid haps found only in the many countries receiving nationalism" Putin's straightforward observations remittances from tiieir nationals working in the US. regarding tlie "growing influx of cash used directly to There are many reasons to be critical of Russian ecomeddle in our domestic afïairs"—a policy that McFaul nomic performance and policies, but the super-high
Russia has long served as America's dark double, an object of wishful thinking, condescension and self-righteousness in a quest for American purpose
42
Prospect APRIL 2OO8
STEPHEN KOTKiN ESSAY
growth rate of Kazakhstan is not one of them. In reality, though, McFaul and Stoner-Weiss are driven not by any interest in economics, but by the alleged urgency of démocratisation for US foreign policy In this regard, Robert Legvold, editor of the
lutism in Russia as a capacious toolbox, and one that today too, can advance the country economically and culturally, even if such an approach carries the danger of overreach. Still, the general tenor of the volume falls in line witii what Foglesong has shown to collection Russian Foreign Policy in the Twenty-first be an American-identity crusade projected on to Century and the Shadow of the Past, published last year, Russia since 1881. Foglesong quotes David provides an echo. His introduction is a defence of a Lawrence, founder of US News and IVorld Report, long overdue recourse to some history in analysing expressing the American establishment's underlying contemporary Russia. But even as he urges analysts credo back in 1958: "There can be no safety in the to study Russia's past, he urges Russia "to escape its world as long as we have autocratic regimes." This past," by which Leg\'üld means its authoritarianism. belief opens the widest possible field fbr a missionary Above all, he insists that the US and the EU have foreign policy (and for the inevitable hypocrisy). It "legitimate" interests in Russia's domestic political succeeded in uniting liberal internationalists, like arrangements because of their impact on Russia's McFaul and Stoner-Weiss, with neocons over Iraq, neighbours. (He might also have mentioned the and like all fundamentalist beliefs, it survived that impact on Russia's inhabitants, through international debacle. What it may not survi\ e is the conversion of human rights policy.) In other words, Russian foreign the American dollar into the Mexican peso. policy, in Legvold's mind, flows not from the maw of The unsolved murders of Russian journalists and Russian national interests but from the nature of its the arrests of political activists make many political system. Voilà. Here, projected outwards, we observers want at a minimum to chalk up Putin's have hit upon one of those quintessentially American boom to dumb luck—floating on highly priced reserbeliefs about itself: namely, that the US conducts itself voirs of oil and gas left by nature hundreds of milin the world not on the basis of its national interests lions of years ago—and to predict a come-uppance. but on the basis of its democracy. Maybe Russia is set for a fall. In terms of quotidian Not all the authors in the volume agree with state functions, Russia is badly governed, which Legvold that Russia's absolutism is unsuited to an makes it vulnerable in a crisis. In a global world era of globalisation. David McDonald portrays abso- where everything is connected, if China's boom loses
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Prospect APRIL 2008
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ESSAY STEPHEN KOTKIN
air, Russia too will feel the enormous downdrauglit. And Wall Street's financial engineering may yet annihilate everyone, good and bad alike. Whatever the future holds, it is clear that the world has not seen sucli large authoritarian market economies like Russia'.s or China's since, well, Nazi Germany and its ally Japan. But today's authoritarian Russia and China are not militarily aggressive. And Edward Lucas notwithstanding, these countries are also not likely to be defeated in war and occupied so that the likes of Michael McFaul and Kathryn Stoner-Weiss can have another go at the democracy crusade so well chronicled by David Foglesong. he power of the Kremlin can seem all-encompassing. Across the 20th century, the average time in office for leaders in the democratic US has been about six years. In autocratic Russia, it has been around ten. Remove Stalin's long despotism, and the figure falls to eight. Still, authoritarian successions are always difficult from a regime s point of view. (Perhaps the most remarkable fact about China is not its market transformation but its two .smooth, albeit opaque, political transitions after Deng Xiaoping stepped down, first to Jiang Zemin and then to Hu Jintao.) One of the many weak points of authoritarianism is that it makes bad options appear attractive—like hoping, as many do, that Putin remains Russia's real ruler. But whatever the fate of the latest succession, the Kremlin's China-like strategy will likely continue: suppressing many of the politically liberalising aspects of globalisation while pursuing its economic aspects to the ends of the earth. Just like the Chinese and the Arab autocracies, the Russians are coming—and for real this time. When Russian capital, already highly \ isible in Europe and Britain, comes with ever greater force to Wall Street and to Main Street America, will Americans under-
T
"I'm going to talk about myself in a very loud voice. What would you recommend?"
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Prospect APRIL 2OO8
stand the value of Russia having a substantial stake in US success? Will Americans appreciate that having Russian-owned assets on American soil that could be seized provides a huge source of leverage over the Kremlin that is today lacking? As for the EU, it may be crucial tor north Africa and the Levant, but it is far less so for Russia (or China). The EU seems likely to be bede\ illed for some time o\ er the status of Turkey, while Russia, just like China, continues to pursue bilateral relations with individual European countries. Russia's trade with EU countries is huge—three times its trade with the former Soviet republics—and Germany is easily Russia's biggest single partner (in '2007 tlieir bilateral trade hit $5í2.8bn). Still, right now no place matters more to Russia than London as a commercial hub of globalisation. London's importance is one reason Russia has tried—with episodes like the British Council harassment—to send forceful diplomatic messages over anything related to its sovereignty, just as China does, without undermining real interests. We should not, however, exaggerate Russia's global power. In future the US, the EU and China will each account for no less than one fifth of global GDP. E\ en if Russia does become the world's fifth largest economy, it would still constitute no more than 3 or so per cent of global GOP. The Kremlin will use its seat on the UN security council and presence at the G8 to defend its interests globally, while also seeking good relations with China in various forums. But Russia is not an EU country, not a US ally and not a China ally. It is percei\ed as a possible partner, but also as a potential enemy, by all three. Above all, if Russian companies, whether stateowned or private, are not able to go toe-to-toe w ith the best companies in the world, you can forget the whole game. "Even with the economic situation in our favour at the moment, we are still only making fragmentary attempts to modernise our economy," Putin said in a speech this year on Russia's longterm de% elopment strategy to 2020. "This ine\ itably increases our dependence on imported goods and technology, and reinforces our role as a commodities base for the world economy." He added that "the Russian economy's biggest problem today is that it is extremely ineffective. Labour productivity in Russia remains very low. We have the same labour costs as in tlie most developed countries, but the return is seseral times lower. This situation is all the more dangerous when global competition is increasing." In short. President Medvedex and, if so named. Prime Minister Putin have their work cut out. • FROM THE PROSPECT ARCHIVE Robert Skidelsky on Russia's oil curse www.prospect-magazine.co.uk
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